PHILIP Morris International (PMI), the parent company of PMFTC Inc., reported that its innovative heated tobacco product, IQOS, is now the top revenue earner, surpassing the company’s No.1 cigarette brand Marlboro and supporting the company’s shift to smoke-free products.
PMI said IQOS, launched in 2014, surpassed Marlboro’s net revenue for the first time in a decade. Its latest integrated report shows that 38% of the company’s total net revenue now comes from its smoke-free business.
“For the first time in history, smoke-free products have surpassed cigarette combustibles,” PMI Chief Executive Officer Jacek Olczak said at the Technovation event last Oct. 9 in Neuchí¢tel, Switzerland.
IQOS uses patented induction technology to heat tobacco instead of burning it. As a result, the products are smoke-free and produce a nicotine-containing aerosol that is fundamentally different from cigarette smoke. There is no smoke or ash.
Olczak said PMI views IQOS as a replacement for cigarettes. “It doesn’t make sense to keep focusing on a product with so many negatives when you have one that can deliver similar satisfaction from a consumer perspective, but with a completely different harm profile,” he said.
PMI made a bold commitment in 2014 to go smoke-free by replacing cigarettes with better alternatives. In the same year, the company introduced IQOS in Milan, Italy and Nagoya, Japan. IQOS is now available in 90 countries and used by 30.8 million people worldwide.
PMI, through its local affiliate PMFTC Inc., introduced IQOS in the Philippines in 2020. The product line now includes the latest version, the IQOS Iluma with its consumable heat sticks Terea. A more affordable heated tobacco product, Bonds by IQOS, and its consumable heat sticks Blends were launched in 2022. Meanwhile, ZYN, an oral nicotine pouch, became available in the country in 2023.
Olczak said PMI has made a massive shift in resources, with 99 percent of the company’s research and development spending–amounting to several hundred million dollars per year–dedicated to new products.
Olczak said PMI, in its effort to provide better alternatives to 1.1 billion smokers worldwide, acknowledges that people have different expectations for alternative products and different usage patterns. “There is no one smoker persona. So our role is to continuously innovate,” he said.
PMI vice president for international communications and engagement Tommaso Di Giovanni said during a presentation that the company invested more than $12.5 billion and employs over 1,500 engineers, scientists, technicians, and support staff for the ongoing development of its smoke-free products.
Di Giovanni said governments, NGOs and everyone including physicians, health authorities, and academia have a role to play in the smoke-free transition. “What they say can influence adoption and decisions. The pace of change will depend on them,” he said.
Di Giovanni, in an exclusive interview with Filipino journalists, acknowledged the Philippines as a pioneer in terms of legislation with the passage of the Vape Law. “They (Philippines) actually set a pioneering framework which is unique in the region. The Philippines is the first in the region, a tribute to the visionary approach of the government,” he said.
Olczak said that PMI would not be able to achieve its smoke-free vision in countries that ban smoke-free alternatives.
“Technically speaking, we will not be able in these countries to achieve smoke-free just because we are not allowed. Actually, cigarette sales decline much faster in countries that allowed any form, maybe not even all, but allowed in any shape or form, at least one or two alternatives to the smoke-free product. Clearly, these countries will be on the forefront of reaping or yielding the public health benefit,” he said.
“If you want to have a drastic change from a harm reduction perspective, you should ban the cigarettes and allow the alternatives. But definitely not banning alternatives while allowing cigarettes,” Olczak said.
